Data 1 2 3 4 1 2 Budgeted unit sales 50,000 65,000 110,000 65,000 80,000 95,000
ID: 2508288 • Letter: D
Question
Data 1 2 3 4 1 2
Budgeted unit sales 50,000 65,000 110,000 65,000 80,000 95,000
Selling price per unit $7 per unit
Year 2 Year 3
1 2 3 4 1 2
Budget Unit Sales 50,000 65,000 110,000 65,000 80,000 95,000
Selling price per unit 7$ per unit
Accounts receivable, beginning balance 65,000
Sales collected in the quarter sales are made 75%
Sales collected in the quarter after sales are made 25%
Desired ending finished good inventory is 30% of the budgeted unit sales of the next quarter
Finished goods inventory, beginning $12,000
Raw materials required to produce one unit 5 pounds
Desired ending inventory of the raw material is 10% of the next quarter’s production needs
Raw material inventory, beginning 23,000 pounds
Raw material costs 0.80 per bound
Raw materials purchases are paid 60% in the quarter the purchase are made
Accounts payable for raw material, beginning balance$ 81,500
1. What are the total expected cash collections for the year under this revised budget?
2. What is the total required production for the year under this revised budget?
3. What is the total cost of raw materials to be purchased for the year under this revised budget?
4. What are the total expected cash disbursements for raw materials for the year under this revised budget?
5.
After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 80,000 units in any one quarter. Is this a potential problem?
Yes or No ?
* Please provide answers with excel formulas
1. What are the total expected cash collections for the year under this revised budget?
2. What is the total required production for the year under this revised budget?
3. What is the total cost of raw materials to be purchased for the year under this revised budget?
Explanation / Answer
EXPECTED CASH COLLECTIONS Q-1 Q-2 Q-3 Q-4 YEAR Accounts receivable Beginning 65,000 65000 Quartere-1 sales collected 262,500 87500 350000 Quarter-2 Sales collected 341250 113750 455000 Quarter-3 Sales collected 577,500 192,500 770000 Quarter-4 Sales collected 341,250 341250 Total Cash Collections 327,500 428,750 691,250 533,750 1981250 PRODUCTION BUDGET Q-1 Q-2 Q-3 Q-4 YEAR Q-1 Q-2 Budgeted Sales Units 50,000 65,000 110,000 65,000 290,000 80,000 95,000 Add: Desired Ending Finished inventory 19,500 33,000 19,500 24,000 24,000 28,500 Total Needs 69,500 98,000 129,500 89,000 314,000 108,500 Less: Beginning Finished Inventory 12,000 19,500 33,000 19,500 12,000 24,000 Required Production in units 57,500 78,500 96,500 69,500 302,000 84,500 RAW MATERIAL PURCHASE BUDGET Q-1 Q-2 Q-3 Q-4 Year Q-1 Budgeted Production units 57,500 78,500 96,500 69,500 302,000 84,500 Raw material units per unit 5 5 5 5 5 5 Total Production needs 287,500 392,500 482,500 347,500 1,510,000 422,500 Add: Desired Ending Inventory 39,250 48,250 34,750 42,250 42,250 Total needs 326,750 440,750 517,250 389,750 1,552,250 Less: Beginning Inventory 23,000 39,250 48,250 34,750 23,000 Purchase Units 303,750 401,500 469,000 355,000 1,529,250 Cost price per unit 0.80 0.80 0.80 0.80 0.80 Budgeted Purchase in $ 243,000 321,200 375,200 284,000 1,223,400 EXPECTED CASH PAYMENTS Q-1 Q-2 Q-3 Q-4 Year Beginning Accounts payable 81,500 81500 Q-1 Purchases paid 145800 97200 243000 Q-2 Purchases paid 192720 128480 321200 Q-3 Purchases paid 225120 150,080 375200 Q-4 Purchases paid 170,400 170400 Total Cash disbursement 227,300 289,920 353,600 320,480 1,191,300 Req5 Yes Manager is right in seeing the potential problem. Quarter-3 production plan shows 96500 units however, the constraint is of 80000 units
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